After a sharp fall of the price last Friday, EUR/USD smoothly corrected up on Monday. The price growth was on small volume, therefore it can not be considered as a continuation of the uptrend. Also, the support level 1.1744 – 1.1767 remains relevant, in which large volume is concentrated, that stopped the price fall after the payrolls.
Given the sharp fall of the price on very large volume on Friday and the smooth correction of the price on small volume (the absence of a sharp and strong rebound from the support level), it is worth considering the option of continuation of the fall and a breakdown of the 1.1744-1.1767 level. If price breaks through this mark on increased volume, this will be an excellent signal for opening sales. A stop loss should be placed just above the breakdown volume bar or the beginning of the breakout movement. The potential of the deal is 100-110 points.
The pound is trading in the local consolidation after the strong fall last week. On Monday volume on the market was very small, that’s why we can’t point out any new volume level or zone. The resistance level 1.3144 – 1.3168 is still actual, though the price is far away from it, because until its breakout we should consider opening short positions.
We can enter the market after a smooth upward correction to obtain the better entry point and, as a result, the better risk/profit ratio. The growth should be on small volume. A stop loss should be placed above the resistance level. A potential of the deal is 110-120 pips.
Everything remained the same for USD/JPY as the price is trading in the consolidation between two volume levels: the resistance 110.86 – 111.02 and the support 109.97 – 110.20. That’s why we should wait for the breakout of the boundaries of the consolidation and only after that we can trade this pair.
1 scenario: the continuation of the local growth and the sure breakout of the resistance on large volume. After that we can open long positions with a stop loss placed below the breakout volume bar. The target is 112.12.
2 scenario: the resumption of the fall and the breakdown of the support on large volume too. It opens a possibility for short positions. A stop loss should be placed above the breakdown volume bar. A potential of the deal is up to 120 points.
The pair has broken out the resistance, but the move was on small volume and the price corrected down after that. But still, it is a potentially good bullish signal, because it shows that the price is willing to go up further.
That’s why we should consider long positions, especially after the resumption of the growth on large volume. It will be a great sign for entering the market. A stop loss should be placed below the bullish impulse. A potential of the deal is around 100 pips.
The Australian dollar is trading in the local consolidation near the level of support 0.7895 – 0.7905, in which large volume is concentrated. Also we need to note that the price did not show any sharp reaction on the level, so it makes a probability of the support breakdown very high.
So that we should consider short positions after the confident breakdown of the support on increased volume. A stop loss should be place above the breakout volume bar. A potential of the deal is around 100 pips.
The price is trading in the local little upward consolidation below the resistance level 1261.10 – 1263.60, which contains large volume. The correction of the price was and is on small volume, so that our previous scenario of opening short positions remains the same.
We can enter the market after the resumption of the fall on increased volume which will be a great bearish signal. A stop loss should be placed above the resistance level. A potential of the deal is 120 pips.
The sentiment: this indicator is not useful for us yet as it has not reacted on the last market moves.
The bottom line: as usual, Monday was a calm day, so all our previous scenarios remain the same.